United States: economic activity is picking up the pace...but uncertainty remains

The latest figures from the United States support our scenario of accelerated economic activity in 2017. True, growth was still just slightly under 2% in the fourth quarter (1.9%), but this can largely be explained by foreign trade. As the main growth driver in recent years, consumption (+2.5%) has kept economic activity going. More importantly, after marking time for a spell, business spending has grown more dynamic: capital expenditures, on the decline for a year now, have gained 3.1% and stocks contributed 1% to growth (chart 1).

In early 2017, business and consumer surveys alike confirmed this improvement: the ISM Manufacturing and Services indices began climbing sharply at the end of last year (chart 2), and have stayed the course in the new year, while consumer sentiment has reached new heights (chart 3). The job market is still on a good track: although hourly wage rises slowed in January (+2.5% year-on-year), job creations bounced back (227,000 vs. 148,000 on average in Q4 2016) and the wage bill progressed by another 4%.

In 2017, the US economy is also expected to benefit from the removal of a number of obstacles. After taking 0.4% away from growth in 2017, inventory adjustments finally seem to be coming to an end. Undermined by falling oil prices, structural investment in the fossil-fired energy sector should gain momentum again after costing 0.25% in growth last year. Overall, growth should accelerate by 1.6% in 2016 and top 2% in 2017 (chart 4).

Finally, the fiscal stimulus promised by Donald Trump in his presidential campaign may give additional fuel to the US economy. Of course, there are many uncertainties surrounding this point, making it difficult to establish projections. The content of the various plans under discussion (cross-border tax, household and business tax rate, stimulus for infrastructure investments, etc.) is undefined, and the length of the process means the budget won't be implemented before the end of summer. Until we have a clearer picture, and as long as wage pressures are moderate, the Fed has little reason to rush the normalisation of its monetary policy.